The 10-year Treasury yield rose at the start of the week as oil prices climbed on uncertainty over Iran, while traders trimmed the odds of a Federal Reserve rate hike after last week's soft jobs report. Markets now turn to Wednesday's inflation print for the next signal on the Fed's September decision.
The 10-year Treasury note yield gained 3 basis points to 4.686% at the start of the week, as oil prices climbed and investors looked ahead to a busy week of economic data. The 30-year Treasury bond traded up more than 2 basis points to 5.231%, while the 2-year Treasury note added more than 2 basis points to reach 4.228%.
Oil prices advanced on Monday, with U.S. crude futures hitting $80 a barrel, as uncertainty grew over whether the U.S. and Iran would reach a deal to reopen the Strait of Hormuz. West Texas Intermediate futures gained 3% to around $80.50 a barrel, while Brent crude, the global benchmark, rose 3% to about $86. President Donald Trump said over the weekend that Washington is only partly negotiating with Iran, pointing to the country's heavy inflation and lack of money.
A softer-than-expected July nonfarm payrolls report last week weakened expectations for Federal Reserve interest rate hikes. Deutsche Bank analysts said the weaker data "reduced the urgency for further Fed tightening in the near term," according to CNBC. Traders are now pricing in a nearly 48% chance of a September rate increase, down from 67% a week earlier, according to the CME Group's FedWatch tool.
Attention now turns to July inflation data. The consumer price index reading is due Wednesday at 8:30 a.m. ET, and Deutsche Bank analysts said it could go a long way toward tipping the balance for the Fed's September decision. The producer price index follows Thursday, alongside weekly jobless claims, while Friday brings July retail sales data and the preliminary Michigan consumer sentiment index.
Source: CNBC
Trading involves risk.
Risk Disclaimer
